The Culture of Interbank Forex

I was brought up in the London Foreign Exchange Market. I am very proud of that. Here was a job where no two days were the same, people called a spade a spade. Tempers and egos flew, but we all met down the pub as friends after work.


Yep! That's me at a busy fx desk - ca. 1984



The bond was so strong that there is still a club of veteran dealers that meets in London
once a year, the 'Ancient Marketeers'.

So what was it that created that culture? I think it was because every participant in the market had to be capable of 'making a price'. That is, to be able to quote another dealer a 'two way' (bid and offer) price that was good for at least $1 million. If you could not do that, then you weren't one of the gang.

This made people very interdependent; when you quoted a price, you had to be sure that you could find someone else to quote to you. It was called reciprocity.

Now, all dealers were not equal. Some were out and out 'jobbers', who kept positions for a very short time and relied on banks around the world calling them to create liquidity. EBCo was one of the prime banks. They turned over huge amounts. Before electronic brokers and Straight Through Processing, I saw one of the dealers there write 600 tickets in about 3 hours, keeping the position in his head!

Other banks like this were Allied Irish. Here, they started off with a small team and took the model back to Dublin where AIB is still a major market maker.

Why am I telling you this? Because if you are involved in the TraderMetrics virtual forex market, you will be able to relive that culture. It is competitive and fun. It is also educationally gratifying and personally, I think all managers should spend some time as a spot forex market maker. It teaches so much about business and business psychology.

Anyway, the markets are still very volatile, so stay safe out there!